Illinois MCA Defense Lawyers Business Debt Relief


MCA Defense Lawyers Business Debt Settlement

Merchant cash advance (MCA) loans have become an increasingly popular way for small businesses to access quick financing. However, some MCA lenders engage in predatory practices that can leave business owners saddled with crushing debt. If you find yourself facing aggressive collections or even threats of criminal charges from an MCA lender, working with an experienced defense lawyer can help protect your rights.

How MCA Loans Work

A merchant cash advance functions similarly to a business cash advance or business loan, with some key differences:

  • The MCA provider purchases a percentage of the business’s future credit card sales or revenues in exchange for an upfront lump sum payment. This is technically considered a purchase, not a loan.
  • Payments are taken automatically as a fixed percentage of daily credit card sales. There is no fixed repayment schedule.
  • MCAs can be very high cost, with annualized rates often exceeding 100% APR when all fees are calculated.
  • Approval decisions are made quickly, often within 24-48 hours, as credit scores are generally not checked.

This structure allows almost any business to get fast financing, but also creates opportunities for predatory lending practices that take advantage of cash-strapped business owners.

Common MCA Abuses

While MCA loans can provide legitimate financing, some providers use deceptive or even illegal tactics, such as:

  • Misrepresenting or hiding the true costs and fees of the MCA
  • Falsely promising there are no personal guarantees or collateral required
  • Using overly aggressive collections tactics that verge on harassment
  • Making false threats of criminal charges like fraud or theft
  • Attempting to access business or personal bank accounts illegally
  • Failing to honor agreements made regarding payment plans or settlements

If you feel trapped in a cycle of endless payments with no way out, you may be the victim of an abusive MCA loan. Working with an attorney experienced in MCA defense can help you understand your rights and options.

Four Key MCA Defenses

When facing collections or threats from an MCA provider, several legal defenses may apply to your situation:

1. No Valid Agreement Was Formed

For a contract to be legally enforceable, there must be mutual understanding between parties known as a “meeting of the minds.” Predatory MCA companies often fail to properly disclose fees, rates, and other key terms, preventing the business owner from fully understanding what they are agreeing to. This may render the agreement invalid.

2. Unconscionability

If an agreement is extremely unjust or overwhelmingly favors one party, a court may deem it unconscionable. Factors like excessive fees, lack of understanding, and high-pressure sales tactics indicate unconscionability in MCA contracts.

3. Fraud and Misrepresentation

When an MCA provider intentionally deceives the business owner regarding costs, consequences of default, or other aspects, this constitutes fraud. If fraud can be proven, the entire agreement would be void.

4. Usury Violations

Usury laws restrict lenders from charging excessive interest rates, often over 25-30% APR depending on the state. MCA rates often far exceed these thresholds when all fees are included, violating state laws.

Steps to Challenge an Abusive MCA

If you realize you are caught in the grip of a predatory MCA lender, you can fight back. The first step is reviewing the agreement and all communications to build your case. Any evidence of deception or lack of transparency will help.Next, stop all payments to the MCA provider. This keeps you from accruing additional debts under a potentially invalid agreement. Retain legal counsel to officially notify the lender you are disputing the agreement and collections.Your attorney can then negotiate a settlement or bring legal action if needed. Potential outcomes include:

  • Getting the agreement invalidated and all debts voided
  • Securing a dismissal of any bogus criminal charges
  • Settling debts by paying less than you owe
  • Structuring an affordable payment plan for debts that remain

With an experienced lawyer familiar with MCA cases, you can defend your rights and potentially get out from under the crushing weight of an abusive merchant cash advance agreement. Don’t struggle alone against predatory lenders when legal help is available.

Choosing the Right MCA Defense Lawyer

As MCA loans have grown more popular, a niche legal field has developed around defending business owners from MCA abuse. So what should you look for in picking the right lawyer?

Specialized Experience

Not all attorneys fully grasp the intricacies of MCA agreements and the array of potential defenses. Seek out lawyers with specific experience in MCA litigation.

Resources to Take on Lenders

MCA lenders often have aggressive legal teams ready to crush small businesses in court. Choose a law firm with the resources to go toe-to-toe if needed.

Understanding of Business Needs

You want an attorney who appreciates the realities of running a small business. They should craft solutions that allow you to move forward.

Reasonable Fees

The right lawyer will offer fee structures that provide access to top-notch legal representation while reflecting business budgets. Avoid firms that take only a percentage of debts they get dismissed.

Track Record of Results

When selecting counsel, review their case outcomes. Reputable MCA defense firms should have a strong record of negotiating settlements and winning judgments for business clients.

Key Questions Your MCA Lawyer Should Answer

Here are some of the most important questions to ask during an initial consultation with a prospective MCA defense lawyer:

  • What experience do you have defending against this specific MCA lender?
  • Based on the fees I was charged, do you see strong evidence of usury violations?
  • What are possible outcomes if I challenge this agreement in court?
  • What are your first steps upon taking my case?
  • How can you help protect my business accounts and assets from collections?
  • What percentage of your MCA caseload results in debts being discharged?
  • What alternative payment plans might we be able to negotiate?
  • How much could fighting this legally cost me in legal expenses?

By asking the right questions upfront and reviewing the lawyer’s responses, you can determine if they are the best fit for your situation.

Four Reasons to Hire an MCA Defense Attorney

Deciding whether to hire legal counsel to challenge predatory lending can be difficult when already in financial distress. But an experienced attorney may provide multiple benefits:1. Analyze the Agreement for DefensesThey can review your MCA contract to spot potential violations of law that could invalidate it altogether.2. Handle CommunicationsYour lawyer can take over calls and correspondence with the MCA provider, preventing direct harassment.3. Negotiate SettlementsAttorneys regularly negotiate debt reductions or alternate repayment plans with MCA lenders.4. Sue for Legal DamagesIf lenders refuse reasonable settlements, a lawyer can take them to court to recover financial losses.{:.h2}

The Debt Settlement Process

If you have unsecured business debt from sources like business loans, lines of credit, past due invoices, or business credit cards, debt settlement may be an option to resolve what you owe for less than full balance. Here is an overview of the debt settlement process:1. Review debts and budget – Meet with a debt settlement firm for a free consultation. They will review all unsecured debts and analyze your current business budget to determine realistic settlement amounts.2. Open dedicated account – If suitable for debt settlement, open a new bank account that will be used solely for saving settlement funds. Cease paying creditors directly.3. Begin settlement negotiations – Your debt settlement firm will begin contacting creditors to share financial hardship details and initiate settlement talks. Collectors often refuse to work with business owners directly but will negotiate with companies.4. Make monthly contributions – Based on debts and budget, fixed monthly contributions to your dedicated account will be set. These accumulate settlement funds while avoiding worsening debt during negotiations.5. Settle debts for less – As sufficient funds accumulate for each debt, your settlement company will negotiate one-time lump sum payments of 30-50% of balances owed. This completely resolves what you owe.6. Repeat process – Further monthly contributions continue, allowing more debts to be settled over time until you become entirely debt-free!Debt settlement provides a light at the end of the tunnel for small business owners facing financial crisis. With expert guidance, you can eliminate crushing debts while avoiding bankruptcy and continuing operating your business.

What Debts Can Be Settled?

Many small business debts can potentially be resolved through debt settlement, usually for 50 cents on the dollar or less. Common debts include:

  • Business Credit Cards – Like personal credit card debt, business card balances can often be settled. Issuers would rather recover something rather than selling uncollectible debt to collectors.
  • Business Term Loans – Traditional bank loans or alternative small business loans fall into this category. If collateral was not pledged, these unsecured debts can be negotiated.
  • Lines of Credit – Whether SBA express loans or business lines of credit from non-bank lenders, revolving debt is eligible for settlement discussions.
  • Unpaid Invoices – Overdue payments to vendors and suppliers can leave businesses with debts on their books. Settlements let you resolve aged AP.
  • Commercial Leases – Your business may owe back rent if forced to close locations. Landlords may take lump-sum settlement payments to reclaim properties.
  • Business Taxes – While not all tax debts can be settled directly, penalties and interest accruing on unpaid taxes typically can be.

With the guidance of an experienced debt settlement firm, even debts you assumed could never be reduced can be resolved for fractions of what is owed.


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